By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Nvidia Falls
Please click here for a chart of Nvidia stock (NVDA).
Note the following:
- The Morning Capsule is about the big picture, not an individual stock. The chart of NVDA stock is being used to illustrate the point.
- The chart shows that NVDA has fallen below the trendline.
- If NVDA decisively closes below the trendline, that would be a negative for NVDA and tech stocks.
- NVDA is the most important stock for this stock market as Nvidia is the center of the AI revolution. For more details of the chart, please read yesterday’s Morning Capsule.
- The momo crowd is ignoring NVDA’s fall below the trendline.
- The Fed’s Christopher Waller sees no rush to cut interest rates. He sees recent inflation data as disappointing and wants to see better inflation numbers prior to making the first rate cut. Waller said, “[the data] tells me that it is prudent to hold this rate at its current restrictive stance perhaps for longer than previously thought to help keep inflation on a sustainable trajectory toward 2%.”
- University of Michigan Consumer Sentiment will be released at 10am ET. This may be market moving.
- New economic data will be released Friday at 8:30am ET. The market reaction will come on Monday as the market will be closed tomorrow for Good Friday.
- PCE, the Fed’s favorite inflation gauge. Consensus is 0.4% for Headline PCE and 0.3% for Core PCE.
- Personal income. Consensus is 0.4%.
- Personal spending. Consensus is 0.4%.
- Initial jobless claims came at 210K vs. 213K consensus. This indicates that the jobs picture remains strong, especially at the low end.
- Q4 GDP – Third Estimate came at 3.4% vs. 3.2% consensus. This indicates that the economy continues to be strong.
- Q4 GDP Deflator – Third Estimate came at 1.6% vs. 1.7% consensus.
- Expect cross currents from quarter end window dressing and rebalancing to continue. Please see yesterday’s Morning Capsule for more details.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN) and Alphabet (GOOG).
In the early trade, money flows are neutral in Microsoft (MSFT) and Meta (META).
In the early trade, money flows are negative in NVDA, Apple (AAPL), and Tesla (TSLA).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
Momo Crowd And Smart Money In Stocks
The momo crowd is *** (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is *** in the early trade.
Gold
Gold is hitting a new high.
The momo crowd is *** in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
The momo crowd is *** in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is above $70,000. Bulls are hoping that whales will take advantage of low liquidity during the holiday weekend to run up bitcoin.
Those who are serious about making money in bitcoin carefully should listen to the three part series “WHALES’ SECRETS YOU NEED TO KNOW: CAPTURING BITCOIN PROFITS.” To gain access to the series, please fill out the form below.
Markets
Our very, very short-term early stock market indicator is ***. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Interest rates and bonds are range bound.
The dollar is stronger.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
Gold futures are at $2236, silver futures are at $24.87, and oil futures are at $82.68.
S&P 500 futures are trading at 5309 as of this writing. S&P 500 futures resistance levels are 5400 and 5500 : support levels are 5256, 5210, and 5020.
DJIA futures are up 41 points.
Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash or Treasury bills or allocated to short-term tactical trades; and short to medium-term hedges of ***, and short term hedges of ***. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of seven year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
